Why Switzerland remains at the heart of corruption in sport
Most international sports federations, including the International Olympic Committee (IOC) and world football’s governing body FIFA, are based in Switzerland. Frequent allegations of corruption and poor administration prompted the Swiss government to take action in 2012. Ten years later, despite some improvements, problems remain.
In a reportExternal link published in November 2012, the sports ministry called on international sports federations based in Switzerland to “strengthen the fight against corruption in [their] own organisations” and urged the country to “step up its action” in the fight against corruption and game-fixing in sport.
“Not only the integrity of sport is at stake, but also the image of Switzerland as a country hosting a large number of international sports federations,” the report said. It advocated setting up “systems of good governance […] harmonised and binding at all levels of the pyramid of organised sport”. The report also suggested that Switzerland consider a number of measures, such as “toughening the criminal law on bribery”.
Although this wake-up call had some effect, its success has been limited. Inquiries to the head offices of various federations show that suspicions of financial irregularity are still frequent.
One example among many concerns the current president of the Lausanne-based International Volleyball Federation (FIVB), the Brazilian Ary Graça, who since last May has been investigated in Brazil for “tax fraud, money laundering and identity fraud”.
“Investigators say Graça used money from a sponsorship deal between Banco do Brasil and the Brazilian Volleyball Confederation to pay for contracts with suspected shell companies,” according to Associated Press (AP) news agencyExternal link. Nine other people are also under investigation, including the FIVB’s Brazilian director-general, Fabio Azevedo.
The federation told SWI swissinfo.ch that “these allegations […] are identical to earlier ones which turned out to be false” and pointed out, with court documents attached, that the two executives had been “exonerated afterwards and the matter officially closed”. It added that “the president and director-general have instructed their lawyers to oppose vigorously any attempt to recycle these allegations” and for the time being “the legal procedure has been suspended, pending a decision from an appeal court”.
Very flexible legal framework
Of course parties must be presumed innocent until courts decide otherwise, but it’s striking how many scandals hit senior executives of sports federations based in Switzerland.
“Sports organisations advocate positive moral values. People who have broken the law, especially involving bribery or fraud, should not be allowed to hold office in them,” Carlo Sommaruga, a senator for Geneva, told SWI swissinfo.ch.
The sports ministry, in its 2012 report, declared that “the integrity of sport on the pitch can be ensured only if the organisations that support it – the sports federations and organisers of competitions – demonstrate impeccable integrity themselves”.
Paradoxically, if someone is determined to cheat, the Swiss law on societies contains little to stop them. “It comprises 20 articles, which is very few, and very few of those are binding,” said Jean-Loup Chappelet, emeritus professor of public management at the Graduate School of Public Administration at the University of Lausanne and an expert on the governance of international sports organisations and events.
“Originally, this law was drafted to govern local clubs, which is why it is so liberal,” added Yvan Henzer, a lawyer with the firm Libra Law, a Lausanne practice specialising in sports law.
Founding an association is extremely easy, he said. “Say you’ve invented a new sport and you want to set up an international sporting association based in Switzerland, and be president of it. You just need to draw up some statutes – you can copy them from another association – and voilà: you now have your association under Swiss law.”
If it’s a non-profit association, you don’t even have to register it, he said: “The members are expected to see that the statutes are respected, and the state is not likely to intervene.”
However, over time many sports federations have chosen to base themselves in Switzerland, and huge organisations like Zurich-based FIFA benefit from the same rules as a village football club, with no obligation to keep financial accounts or to publish them, even though they are handling billions of francs from sponsors or television broadcasting rights to major events.
“International sports federations are not subject to the same rules as private companies […] even though they are dealing with colossal amounts of money and are exposed to risks of corruption just like a company is,” said the sports ministry in its report. However, FIFA stressesExternal link that every year it files a financial statement in line with the International Financial Reporting Standards (IFRS).
Troubled waters
The investigation into the president of the International Volleyball Federation is certainly not an isolated case. Still in Lausanne, but this time at the International Swimming Federation (FINA), the former vice-president and now president, Husain Al-Musallam from Kuwait, has been in and out of the news for more than four years.
According to an article by AP External linkin September 2021, Al-Musallam, who is also director-general of the Olympic Council of Asia, was the target of a 2017 investigation by the United States Department of Justice for “suspected racketeering and bribery relating to FIFA and international soccer politics” along with his compatriot Ahmad Al-Fahad Al-Sabah.
This is not all. Al-Musallam was the subject of a 2017 article in British newspaper The Times and German news magazine Der SpiegelExternal link, which mentioned a recorded conversation of his with a business partner, involving kickbacks from sponsorship agreements. FINA says “these historical allegations are firmly rejected by president Husain Al-Musallam. He has never been charged with any offence and the allegations were looked into by several ethics committees, and on each occasion it was found that he had no case to answer.” Indeed, these incidents were not big enough to derail his journey to the presidency of FINA, which he wonExternal link in June 2021.
However, Husain Al-Musallam does not hold a monopoly over scandals in his federation. One of his vice-presidents, the Italian Paolo Barelli, who is also president of the European Swimming League (LEN) based in Nyon, was “named in a complaint alleging financial irregularity” at the LEN, according to the magazine Swimming WorldExternal link. Two other LEN executives, secretary-general David Sparkes and former treasurer Tamás Gyárfás, were named in the allegation. They are mentioned as “signatories to a 2016 contract with an insurance company” to which LEN made payments, specifically under the heading of a sponsorship agreement, yet only the three men seemed to know of the agreement’s existence.
The public prosecutor’s office of canton Vaud “can confirm that an investigation has been launched into the matter in question”, adding simply that “the inquiry is ongoing”. LEN did not wish to comment.
Cross-party support
Until six years ago private-sector bribery – including corruption at sports federations – was not illegal in Switzerland.
“The rules of an association stipulated that a candidate may not offer a benefit or buy someone’s vote, but if a member actually did that, it was just a disciplinary breach and not a criminal offence,” explains lawyer Yvan Henzer.
It was precisely scandals like this at FIFA during the reign of its Swiss president Sepp Blatter (1998-2015) that drove Carlo Sommaruga, from the left-wing Social Democratic Party, to file a parliamentary initiative External linkin 2010. This called for private-sector corruption cases to be investigated on a mandatory basis, without a complainant having to come forward, as was already the case with public-sector corruption.
Not only parties on the political left were fed up with this situation. Roland Büchel from the right-wing Swiss People’s Party also called for action on corruption in sport in a motion he put forward the same year. These initiatives eventually led to an amendment of the Swiss Criminal Code on the basis of recommendations put out by the Group of States against Corruption (GRECO), a Council of Europe group set up to encourage member states to fight corruption more effectively.
The amendment came into effect in July 2016, Sommaruga recalls. “Both active and passive bribery in the private sector now trigger a criminal investigation ex officio,” he says. “The public prosecutor has a legal mandate to look into these matters.”
Yet Sommaruga says he is “not convinced that public prosecutors are doing all they can to fight corruption within these federations”. The reason, he thinks, is that these cases have no immediate impact on the local economy. “If FIFA slips envelopes to delegates from certain countries to influence their votes in favour of another country, there’s no financial or social impact in Switzerland,” he points out. “On the other hand, it may have an impact on Switzerland’s image.”
Profitable federations
While the flexibility of the Swiss legal system must have been attractive to international sports federations, it was not the only factor drawing them here. According to Jean-Loup Chappelet, “a large number of these organisations arrived in Switzerland in the 1990s, following the activist approach adopted by the president of the International Olympic Committee (IOC) at the time, Juan Antonio Samaranch. They wanted to be close to the IOC, based in Lausanne, since many of them were financially dependent on it.”
Indeed, every four years the IOC redistributes its revenue from the Olympics to the federations, depending on the importance of the sports concerned.
“The criteria for this hand-out are not made public, but the audience for different sports on television is a factor weighted by Olympic tradition and a good deal of politics,” Chappelet says. “The federations in the Summer Games get to share $530 million (CHF490 million), while the seven international sports federations in the Winter Games will get about $220 million by the end of 2022.”
Switzerland’s location at the heart of Europe and the fact that the functioning of the country had barely been affected by the Second World War also spoke in its favour.
Today Switzerland, and in particular canton Vaud in the French-speaking part of the country, are the locations of choice for international sports federations. Some 53 international sports organisations have their head office in the Alpine country, 46 of them in Vaud, as is listed in a recent reportExternal link by the International Academy of Sport Science and Technology (AISTS) covering the period 2014-2019. According to this report, the organisations generated economic benefits to the tune of CHF1.68 billion a year in Switzerland during that period, of which CHF873 million went to Vaud. It also said international sport employed over 3,300 people in Switzerland in 2019.
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The international sports federations pay no tax in the canton. Vaud government minister Philippe Leuba, who has the cantonal responsibility for sport, denies that that might be a reason for the canton’s popularity.
“Every country in the world gives these federations a tax break, so it would be wrong to think that that is why they come here,” he says. In his opinion, the reason is the proximity of the IOC, the overall network available and the administrative assistance service, unique in Switzerland, which facilitates the setting up of federations.
A special kind of expats’ club
The international sports federations don’t just bring in run-of-the-mill expatriates, either. Take for example the Lausanne-based International Fencing Federation (FIE), whose president is none other than Russian oligarch Alisher Usmanov. His conflicts with the Russian opposition figure Alexei Navalny, who accused him of bribery involving former president Dmitry Medvedev, were closely followed in Russia. Usmanov, a billionaire considered close to the Kremlin regime, ultimately won his libel case against Navalny.
Resident in Lausanne but known to spend a great deal of his time on a private yacht longer than a football field, Usmanov attracted attention at the beginning of 2020 when he presented the IOC with the original manuscript of the Olympic Games manifesto, drawn up in 1892 by Pierre de Coubertin. Usmanov had bought it at auction for $8.8 million. He was also mentioned in the 2017 Paradise Papers for a conflict of interest, which he “strongly deniedExternal link”.
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The international sports federations have their fair share of politically exposed persons (PEPs), that is, people who occupy or have occupied a senior public role, including heads of state, government ministers, judges or senior military staff. NorthRow, a British company specialising in fighting financial crime, points outExternal link that such people are “exposed to more opportunities to accept bribes, be involved in corruption by virtue of their position and launder money”.
The Swiss parliament added executives of sports federations to the category of PEP several years ago, and this status carries with it obligations of increased diligence by banks.
‘Turkeys voting for Christmas’
For its part, the IOC has decided to act in order to rid the sports organisations of their unsavoury aspects. Let’s not forget, however, that this organisation hasn’t been spared corruption scandals, such as the Salt Lake City affair, which led to a purge of ten members who received more than a million dollars in bribes to vote for the US city for the Winter Games in 2002. Other cases regularly mar the voting for the location of the Games, such as the most recent Summer Games, in Tokyo.
“Beginning in 2015, the IOC said ‘enough is enough’ and ‘change or be changed’,” Chappelet says. The organisation initiated reforms of governance, in which Chappelet took part. “Today, the 33 international sports federations for the Summer Olympics open up their accounts. There has certainly been an improvement, although there’s still work to be done.”
In spite of everything, while things seem to be going in the right direction, how can someone like Husain Al-Musallam be elected to head the International Swimming Federation? “He was the only candidate – that was the problem,” Chappelet explains. “It’s the national federations who decide who to support. They would have to be convinced of the need for change. But as the saying goes, it would be like turkeys voting for Christmas.”
Mark Pieth, a former professor of criminal law at the University of Basel and an expert on anti-corruption work, has been involved in the reforms of the FIFA. He remains critical.
“FIFA has finally adopted a new code of ethics and other fairly modern internal regulations, but at the same time it got rid of the independent supervisor and the ethics committee, which have been replaced by friends or unqualified people,” he says. “With the wrong people, a good set of rules can become just a paper tiger.”
While he says the ethics committee of the IOC has improved, he believes that corruption is “systemic” in some federations. “One mustn’t forget that electors in the international federations come from all over the world, and bribery is the norm in many countries.”
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Secret meetings
When executives of federations can no longer be defended in the face of public opinion, the IOC occasionally wields the axe. That happened after the re-election to the presidency of the Asian Handball Federation (AHF) last November of Ahmad Al-Fahad Al-Sabah (mentioned earlier in connection with the US investigation of suspected racketeering and bribery linked to FIFA).
Al-Sabah had been found guilty in September 2021, just two months earlier, and sentenced to 15 months in jail by the Criminal Court of Geneva for document forgery. According to Inside the GamesExternal link, the IOC intervened with the International Handball Federation (IHF) based in Basel. This organisation confirmed to SWI swissinfo.ch that it had “approached the Asian Handball Federation […], expressing misgivings about the candidacy” of Al-Sabah. He was still elected head of the Kuwait-based organisation, but as the IHF points out, he later “decided to step down voluntarily as president of AHF from the day of the election until further notice”.
But although some heads have rolled, the problems of governance tend to persist. That was the case with FIFA, where Blatter resigned after being accused of making an illegal payment of CHF2 million from FIFA to former UEFA President Michel Platini, who worked for Blatter as a consultant between 1998 and 2002. Blatter was replaced by another Swiss, Gianni Infantino, who has since been under investigation by prosecutors for secret meetings with the former Attorney General of Switzerland, at a time when the Office of the Attorney General of Switzerland (OAG) was investigating FIFA. According to Infantino, these meetings were organised to demonstrateExternal link FIFA’s willingness to cooperate with the OAG.
The same goes for the International Weightlifting Federation (IWF), based in Lausanne. Its president, the Hungarian Tamás Aján, who is in his eighties, resigned in 2020, caught up in a scandal involving doping and corruption. His first vice-president, the Thai Intarat Yodbangtoey, retains his position despite being the subject of allegations of corruption in a reportExternal link published the same year.
“The vote broker distributing the $5,000 cash bribe from a bag in his possession in 2017 was said to be Major General Intarat Yodbangtoey, the 1st Vice President of the IWF,” the report says. The federation was unwilling to comment.
Possibility of suspension
In view of these repeated events, can one really expect ever to banish bad governance from the international sports federations?
Carlo Sommaruga thinks one solution could be to temporarily disqualify people from their professional work. “Our criminal code allows for people to be suspended from a profession for a period of five years. It doesn’t happen often, but it could become more common. A suspension would mean that some problem people could be shut out of the game for several years,” he says.
“We could also think of having national rules for international associations based in Switzerland, especially requiring evidence of probity on the part of board members of associations. But it seems it would be hard to find a political majority for that.”
Mark Pieth agrees with Sommaruga’s analysis, pointing out that just such a measure was turned down about ten years ago. “In the 2010s the Council of Europe proposed supervising the international sports federations, but it was frustrated by a lack of will in the Swiss parliament. The sports lobby vetoed it, fearing that these associations would go elsewhere.”
What about Switzerland’s image?
The issue of Switzerland’s image, which bothered the federal sports ministry ten years ago, certainly hasn’t gone away. Could the presence of these federations on Swiss soil harm the country’s reputation?
“Not at all,” reckons Vaud politician Philippe Leuba. “If you care about the sports ideal, it’s just as well to have them here – it’s an extra incentive to being ethical.”
Rather than talk about the controversies, Leuba prefers to consider sport as a factor that promotes peace in the world. “There has never been so much discussion of labour law in Qatar since the country got the [football] World Cup,” he says. “Sometimes you have to applaud the work that the international sports federations do.”
Sommaruga admits that scandals in federations like volleyball that are “under the radar” because they aren’t subject to much media scrutiny give him “less cause for worry about the reputation of Switzerland” than the scandals surrounding FIFA, European football’s governing body UEFA or the IOC. The latter are “intensively scrutinised by the media and the public since staggering amounts of money are involved”.
He says the handling of the FIFA case sticks in his craw. “The fact that the case is now finished in the US and that people have been convicted, while in Switzerland we have still to appoint a prosecutor, affects Switzerland’s image and makes us look like a banana republic,” he says. “One can’t help wonder whether there’s been a quiet agreement somewhere that there are never to be any convictions in this case.”
As for Pieth, he is under no illusions: “The sports organisations bring Switzerland a certain prestige, but the presence of some of them, like FIFA or even the IOC, which is very close to a number of dictators, could end up having the opposite effect.”
He still doubts whether it will really hurt the country’s image in the long term. “We’ve had to deal with so many embarrassing situations in the past – accepting money from dictators, Nazi gold, or, at present, turning a blind eye to the trade in natural resources. Nothing has ever slowed us down.”
Time will tell whether the coming decade will bring more composure and respectability to international sports federations.
Translated from French by Terence MacNamee
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